Tag Archives : Trade

U.S. Secretary of Agriculture Sonny Perdue last week released a detailed accounting of how the U.S. Department of Agriculture (USDA) calculated estimated damage from trade disruptions. USDA’s Office of the Chief Economist developed an estimate of gross trade damages for commodities with assessed retaliatory tariffs by Canada, China, the European Union, Mexico, and Turkey to set commodity payment rates and purchase levels in the trade mitigation package announced by USDA on September 4, 2018. USDA employed the same approach often used in adjudicating World Trade Organization trade dispute cases.

“We have pledged to be transparent about this process and how our economists arrived at the numbers they did,” Perdue said. “Our farmers and ranchers work hard to feed the United States and the world, and they need to know that USDA was thorough, methodical, and as accurate as possible in making these estimates. It was a large and important task, and I thank Chief Economist Robert Johansson and his staff for their hard work.”

U.S. Secretary of Agriculture Sonny Perdue today announced details of actions the U.S. Department of Agriculture (USDA) will take to assist farmers in response to trade damage from unjustified retaliation by foreign nations. President Donald J. Trump directed Secretary Perdue to craft a short-term relief strategy to protect agricultural producers while the Administration works on free, fair, and reciprocal trade deals to open more markets, in the long run, to help American farmers compete globally. As announced last month, USDA will authorize up to $12 billion in programs, consistent with our World Trade Organization obligations.

“Early on, the President instructed me, as Secretary of Agriculture, to make sure our farmers did not bear the brunt of unfair retaliatory tariffs. After careful analysis by our team at USDA, we have formulated our strategy to mitigate the trade damages sustained by our farmers. Our farmers work hard, and are the most productive in the world, and we aim to protect them,” said Secretary Perdue.

These programs will assist agricultural producers to meet the costs of disrupted markets:

USDA’s Farm Service Agency (FSA) will administer the Market Facilitation Program (MFP) to provide payments to corn, cotton, dairy, hog, sorghum, soybean, and wheat producers starting September 4, 2018. An announcement about further payments will be made in the coming months, if warranted.

USDA’s Agricultural Marketing Service (AMS) will administer a Food Purchase and Distribution Program to purchase up to $1.2 billion in commodities unfairly targeted by unjustified retaliation. USDA’s Food and Nutrition Service (FNS) will distribute these commodities through nutrition assistance programs such as The Emergency Food Assistance Program (TEFAP) and child nutrition programs.

Through the Foreign Agricultural Service’s (FAS) Agricultural Trade Promotion Program (ATP), $200 million will be made available to develop foreign markets for U.S. agricultural products. The program will help U.S. agricultural exporters identify and access new markets and help mitigate the adverse effects of other countries’ restrictions.

“President Trump has been standing up to China and other nations, sending the clear message that the United States will no longer tolerate their unfair trade practices, which include non-tariff trade barriers and the theft of intellectual property. In short, the President has taken action to benefit all sectors of the American economy – including agriculture – in the long run,” said Secretary Perdue. “It’s important to note all of this could go away tomorrow, if China and the other nations simply correct their behavior. But in the meantime, the programs we are announcing today buys time for the President to strike long-lasting trade deals to benefit our entire economy.”

Background on Market Facilitation Program:

MFP is established under the statutory authority of the Commodity Credit Corporation (CCC) and administered by FSA. For each commodity covered, the payment rate will be dependent upon the severity of the trade disruption and the period of adjustment to new trade patterns, based on each producer’s actual production.

Interested producers can apply after harvest is 100 percent complete and they can report their total 2018 production. Beginning September 4th of this year, MFP applications will be available online at www.farmers.gov/mfp. Producers will also be able to submit their MFP applications in person, by email, fax, or by mail.

Eligible applicants must have an ownership interest in the commodity, be actively engaged in farming, and have an average adjusted gross income (AGI) for tax years 2014, 2015, and 2016 of less than $900,000. Applicants must also comply with the provisions of the “Highly Erodible Land and Wetland Conservation” regulations. On September 4, 2018, the first MFP payment periods will begin. The second payment period, if warranted, will be determined by the USDA.

Market Facilitation Program

Commodity

Initial Payment Rate

Est. Initial Payment**

(in $1,000s)

Cotton

$0.06 / lb.

$276,900

Corn

$0.01 / bu.

$96,000

Dairy (milk)

$0.12 / cwt.

$127,400

Pork (hogs)

$8.00 / head

$290,300

Soybeans

$1.65 / bu.

$3,629,700

Sorghum

$0.86 / bu.

$156,800

Wheat

$0.14 / bu.

$119,200

Total

$4,696,300

** Initial payment rate on 50% of production

The initial MFP payment will be calculated by multiplying 50 percent of the producer’s total 2018 actual production by the applicable MFP rate. If CCC announces a second MFP payment period, the remaining 50 percent of the producer’s total 2018 actual production will be subject to the second MFP payment rate.

MFP payments are capped per person or legal entity at a combined $125,000 for dairy production or hogs. Payment for dairy production is based off the historical production reported for the Margin Protection Program for Dairy (MPP-Dairy). For existing dairy operations, the production history is established using the highest annual milk production marketed during the full calendar years of 2011, 2012, and 2013. Dairy operations are also required to have been in operation on June 1, 2018 to be eligible for payments. Payment for hog operations will be based off the total number of head of live hogs owned on August 1, 2018.

MFP payments are also capped per person or legal entity at a combined $125,000 for corn, cotton, sorghum, soybeans and wheat.

Background on Food Purchase and Distribution Program:

The amounts of commodities to be purchased are based on an economic analysis of the damage caused by unjustified tariffs imposed on the crops listed below. Their damages will be adjusted based on several factors and spread over several months in response to orders placed by states participating in the FNS nutrition assistance programs.

Food Purchases

Commodity

Target Amount (in $1,000s)

Apples

$93,400

Apricots

$200

Beef

$14,800

Blueberries

$1,700

Cranberries

$32,800

Dairy

$84,900

Figs

$15

Grapefruit

$700

Grapes

$48,200

Hazelnuts

$2,100

Kidney Beans

$14,200

Lemons/Limes

$3,400

Lentils

$1,800

Macadamia

$7,700

Navy Beans

$18,000

Oranges (Fresh)

$55,600

Orange Juice

$24,000

Peanut Butter

$12,300

Pears

$1,400

Peas

$11,800

Pecans

$16,000

Pistachios

$85,200

Plums/Prunes

$18,700

Pork

$558,800

Potatoes

$44,500

Rice

$48,100

Strawberries

$1,500

Sweet Corn

$2,400

Walnuts

$34,600

Total

$1,238,800

Program details yet to be determined

Commodity

Target Amount (in $1,000s)

Almonds

$63,300

Sweet Cherries

$111,500

Total

$174,800

Products purchased will be distributed by FNS to participating states, for use in TEFAP and other USDA nutrition assistance programs.

Purchasing:

AMS will buy affected products in four phases. The materials purchased can be adjusted between phases to accommodate changes due to: growing conditions; product availability; market conditions; trade negotiation status; and program capacity.

AMS will purchase known commodities first. By purchasing in phases, procurements for commodities that have been sourced in the past can be purchased more quickly and included in the first phase.

Vendor Outreach:

To expand the AMS vendor pool and the ability to purchase new and existing products, AMS will ramp up its vendor outreach and registration efforts. AMS has also developed flyers on how the process works and how to become a vendor for distribution to industry groups and interested parties. Additionally, AMS will continue to host a series of free webinars describing the steps required to become a vendor. Stakeholders will have the opportunity to submit questions to be answered during the webinar. Recorded webinars are available to review by potential vendors, and staff will host periodic Question and Answer teleconferences to better explain the process.

Product Specifications:

AMS maintains purchase specifications for a variety of commodities, which ensure recipients receive the high-quality product they expect. AMS in collaboration with FNS regularly develops and revises specifications for new and enhanced products based on program requirements and requests and will be prioritizing the development of those products impacted by unjustified retaliation. AMS will also work with industry groups to identify varieties and grades sold to China and other offshore markets such as premium apples, oranges, pears and other products. AMS will develop or revise specifications to facilitate the purchase of these premium varieties in forms that meet the needs of FNS nutrition assistance programs.

Outlets:

AMS purchases commodities for use in FNS programs such as the National School Lunch Program, TEFAP and other nutrition assistance programs. AMS is working closely with FNS to distribute products to State Agencies that participate in USDA nutrition assistance programs as well as exploring other outlets for distribution of products, as needed.

To the extent possible, FNS will identify items for distribution that are appropriate for each potential outlet. The products discussed in this plan will be distributed to States for use in the network of food banks and food pantries that participate in TEFAP, elderly feeding programs such the Commodity Supplemental Foods Program, and tribes that operate the Food Distribution Program on Indian Reservations.

These outlets are in addition to child nutrition programs such as the National School Lunch Program, which may also benefit from these purchases.

Distribution:

AMS has coordinated with the Office of the Chief Economist, FNS, Industry, and other agency partners to determine necessary logistics for the purchase and distribution of each commodity including trucking, inspection and audit requirements, and agency staffing.

Background on Agricultural Trade Promotion Program:

The FAS will administer the ATP under authorities of the CCC. The ATP will provide cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research, and technical assistance. Applications for the ATP will be accepted until November 2, 2018 or until funding is exhausted. Funding should be allocated to eligible participants in early 2019. The ATP is meant to help all sectors of U.S. agriculture, including fish and forest product producers, mainly through partnerships with non-profit national and regional organizations.

Montana Stockgrowers appreciates the opportunity to be a part of Governor Bullock’s trade mission to Taiwan and South Korea this week. Our Executive Vice President, Errol Rice, is a member of the delegation on the trip, working to build relationships with business leaders that will lead to greater economic opportunities for Montana ranchers and our beef products.

Asian markets are a rapidly growing segment for U.S. beef products with opportunity for tremendous growth. While domestic demand for our beef remains strong, future market growth depends on our ability to be globally competitive. These Asian markets continue to see growth in economic activity and a stronger middle class with a disposable income to purchase higher quality food products, such as American beef.

Asian consumers are demanding high-quality U.S. beef products. With the trade mission overseas, we are looking at how our product is positioned in Asian markets next to our competitors such as Australia and New Zealand. We want to learn more and get a sense of what they like about our product and gather any information we can take back to Montana to learn how to better position our beef products and meet their needs.

South Korea is our fifth largest market valued at $847 Million with room to grow. Taiwan is an important trading partner for us, consuming almost $300 million in U.S. beef in 2014. Global exports of Montana and U.S. beef accounted for $350 of per head value in 2014. That value is incredibly important for cuts of beef that are not consumed domestically, but do remain popular in international cultures.

Stronger export markets for the U.S. beef industry translate to better demand for Montana cattle ranchers. Montana contributes almost 1 million head of cattle to the U.S. feeder supply each year and is a large player in genetics for quality beef cattle bred across the country. Export markets are important to ensuring we have demand drivers for our products and ensuring profitability in our business.

Our strategy is to focus on growing market share and driving investment into Montana’s cow/calf, feeding and processing infrastructure, so that we can better promote the unique attributes of Montana and U.S. beef to consumers in Taiwan and South Korea. Montana Stockgrowers looks to support open markets in parts of Asia, such as Taiwan and Korea, ensuring a level playing field and science-based standards for trade of U.S. beef.

We also look for investment opportunities for beef processing capacity in the state of Montana, which has been a priority of the Governor. This has been a project endorsed by Stockgrowers to add value to our ranchers’ products coming from Montana and is very important to trade opportunities in export markets.

Again, we thank Governor Bullock for his efforts broaden market access for Montana’s beef products in this very important region of the world.

Montana Governor Steve Bullock today announced that he will lead a seven-day trade mission to Taiwan and South Korea in the fall of 2015. Governor Bullock made the announcement during his remarks at the Why Asia Matters to Montana public forum that took place in Bozeman as part of the 2015 Asia + Montana Bozeman Retreat coordinated by the Maureen and Mike Mansfield Center, the City of Bozeman, and Montana State University.

“With an increasingly connected global economy, I am committed to enhancing the competitiveness of Montana businesses in the international marketplace,” said Bullock. “I look forward to strengthening our trade relations with these two countries and promoting the quality and authenticity of Montana’s businesses, products, and people.”

The mission will bring together leaders in business, education, and government to focus on creating export opportunities for Montana businesses as well as strengthening the diplomatic and trade relationships between the economies of Montana, South Korea, and Taiwan. The mission will take place October 24 – 30 and include Montana business owners who have identified export opportunities in the Asia Pacific region.

Organized by the Governor’s Office and the Montana Department of Commerce, the trade mission will include high-level meetings with officials in the Taiwanese and South Korean governments, business and investment meetings for the business delegation, and joint seminars to promote Montana in both countries.

“We are putting together a fast-paced, business-focused trip that will open doors for Montana businesses and strengthen diplomatic and trade relations between Montana and Taiwan and South Korea,” said Montana Department of Commerce Director Meg O’Leary.

With more than 95 percent of the world’s population and 80 percent of the world’s purchasing power outside the United States, future economic growth and jobs in Montana increasingly depend on expanding international trade and investment opportunities. Last fall, Governor Bullock led a similar mission to the People’s Republic of China. Since then, Montana has hosted numerous inbound trade delegations from China and connected qualified Chinese companies with Montana businesses looking to grow and expand in the market. This past week, an international energy conference took place in Billings as a result of a meeting Bullock had with Chinese energy officials during the mission.

Participating businesses will have the opportunity to take advantage of trade facilitation services provided by the U.S. Commercial Service, which are designed to connect businesses with top-level corporate and government leaders in one-on-one business meetings. Participants will be responsible for individual trip expenses.

–Press Release, August 28. Stay tuned to learn more about how this trip will involve ranchers and beef trade.

Free trade is on the minds of Congress, MSGA and many U.S. business executives these days as the White House looks to push for reauthorization of Trade Promotion Authority (TPA) as well as a watershed Pacific trade deal with Japan and 10 other countries. The Japan agreement is better known as TPP. Congress is also weighing in to modify mandatory Country of Origin Labeling (COOL) requirements.

MSGA was actively involved in the formation of COOL legislation during the 2002 Farm Bill. Since that time, the program has been challenged in the World Trade Organization (WTO) by Canada and Mexico. The WTO’s Appellate Body has determined that our COOL requirements unfairly discriminate Canada and Mexico’s beef exports. Canada and Mexico are now seeking more than $3 billion per year in sanctions against a variety of U.S. exports. According to the Canadian Embassy in Washington, D.C., the top Montana exports affected by retaliation include cattle, cherries, corn, pasta and jewelry valued at right around $10 million.

MSGA has long supported COOL, but realizing the significance of retaliation, the MSGA Beef Production and Marketing Committee and the Board of Directors adopted new interim policy on June 6th. The policy supports the repeal of our current COOL statute and then work to develop a comprehensive, broad-based labeling program for U.S. beef.

On June 10th, the House passed H.R. 2393, the COOL Amendments Act, by a vote of 300-131. H.R. 2393 amended the Agriculture Act of 1946 to repeal mandatory COOL. As I write this piece, the Senate Agriculture Committee is deliberating on its own version of a COOL bill. The Senate may have some hurdles to jump to get the required 60 votes for full repeal but we will be monitoring and weighing in on this very actively in the next several weeks.

Since 1974, Congress has enacted TPA legislation that gives the President guidelines on negotiating trade agreements while giving Congress the final up or down vote. A consensus version of TPA passed through both the House and Senate this month and is headed to the President’s desk (as of this writing). MSGA has worked very hard to ensure that agriculture and business has the balance of power to get TPA reauthorized.

Our point of view is that there was a time when the largest part of our economic activity was domestic, but now our future depends on our ability to be globally competitive. TPA is key to accessing the additional demand from the 96% of consumers that live outside the United States. TPA eliminated tariffs on U.S. beef by 40%, 20% and 89% in Korea, Panama and Colombia alone.

We are trying to level the global playing field. According to Michael Froman the U.S. Trade Ambassador, the average tariff in TPP countries is three to four times as high as ours is. It equates to 70% on autos, 50% on machinery, 35% on chemical and 50% on beef. A successful TPP agreement will either make these zero or much lower which in turn creates more economic opportunity for our U.S. cattle market. Let’s also not forget about China. There is no formal access for U.S. beef into China. If we care about American jobs and beef’s role in feeding a global population then we have to make progress on all of these fronts.

WASHINGTON – On Monday, June 29, USDA APHIS released their final rules for the Importation of Fresh Beef from Northern Argentina and a Region in Brazil. With this step by the Administration, these areas with a known history of Foot-and-Mouth disease would be allowed to begin the inspection process to import fresh and frozen beef products into the United States. The National Cattlemen’s Beef Association stands firmly opposed to this regulation, not on the basis of trade but on the basis of animal health concerns; no trade is worth jeopardizing our herd health.

“FMD is a highly contagious and devastating disease, not just for the cattle industry, but for all cloven-hoofed animals and it can be introduced and spread through the importation of both fresh and frozen products,” said NCBA President and Chugwater, Wyoming, cattleman, Philip Ellis.. In 1929, our industry took profound and personally devastating steps to eradicate this disease and the United States has been FMD free ever since. But the actions of this administration for purely political gain threaten the very viability of our entire industry and threaten hundreds of thousands of American cattle-producing families.”

NCBA has demonstrated through numerous public comments and in person through meetings with staff and members, our concerns regarding the importation of fresh and frozen product from Northern Argentina and these 14 states in Brazil. There is a long history of repeated outbreaks in many of the neighboring South American countries, as well as a history of problems in both Argentina and Brazil with compliance to animal health and food safety regulations. Despite this long history of such an economically devastating animal disease, the Administration did not conduct an objective quantitative risk analysis for this rule, as was performed in 2002 for Uruguay.

The effect of an FMD outbreak in the United States would be devastating to animal agriculture and our entire economy with estimates for total economic losses ranging from $37 billion to $228 billion, depending on the size of an outbreak. Moreover, innumerable losses would occur through the closure of export markets, lost domestic sales, lost opportunities, and a loss of consumer confidence in beef.

USDA APHIS has worked for over 80 years to keep our country free of FMD, now is not the time to give up on that commitment simply to fulfill a political legacy.

MSGA supports opening foreign trade relations, utilizing science-based standards to facilitate trade. However, we do not support this proposal for importation of fresh (chilled or frozen), maturated and deboned beef from the specified 14 regions in Brazil into the United States. The risk and potential for catastrophic impact due to the introduction of FMD into U.S. cattle herds is not worth the small amount of trade that would be gained.

With 2.55 million head of cattle, making an economic impact of $1.4 billion annually to the state, the proposed rule will have a large impact, on not only cattle ranchers, but also the well-being of the state of Montana.

Canadian and U.S. cattle producers may reside on separate sides of an international board and conduct business under different government regulations, but they encounter many similar issues, as was the topic of discussion during a recent round table at the Canadian Western Agribition. On behalf of the Montana Stockgrowers Association, I participated in a discussion on U.S. and Canadian Agricultural Policy and Trade Issues in Regina, Saskatchewan on November 25, 2014.

Panel members included representatives of Canadian Agriculture organizations from Alberta and Saskatchewan, along with U.S. representatives from the states of Montana, Michigan, Nebraska and Colorado. During the course of discussion, several topics related to the cattle industry in both countries were addressed, and conversations revealed opportunity for collaboration in many areas.

There are several mutual concerns for U.S. and Canadian cattle producers, as we share several market influences, consumers and environmental challenges. Governmental agencies outside of agriculture for both countries seem to present similar challenges for livestock producers. Coming out of the trip, my impression was of great encouragement for the conversations at hand and the opportunities that lay ahead for future correspondence.

With positive cattle and beef markets for producers in both countries, recent years have been positive for the industries. Canadian and U.S. cattle herds share many genetics and marketing influences. Maintaining free trade agreements between the two governments is crucial for this continued success of the North American beef industry. Addressing labor shortages and increased government regulations continue to be concerns for both industries.

Opportunity exists for collaboration in areas of research between Canadian and U.S. institutions. The need to prevent duplicative research is needed for great progress. Partnerships and sharing of information would improve knowledge of current study subjects and allow for better collaboration when geographical similarities will allow.

Several subjects were discussed during the panel session. Conversations were dominated by the following topics.

Public Communication Efforts

An emphasis on consumer awareness of agricultural and food practices, and providing good science information is a concern of the industry. Industry partnerships continue to be critical in making these connections for sustainability and marketing, however retailers have expressed it is not their role to educate their customers about cattle production. McDonalds Canada has been working on sustainability efforts, with hopes to have a system in place by 2017. The retailer has yet to define sustainability, possibly waiting on actions out the Global Sustainable Beef Roundtable. Several panelists emphasized the importance of producer involvement in consumer conversations, realizing the need to build trust before using facts in dialogues, “leading with knowledge, not facts.”

Environmental and Wildlife Regulations

Government regulations in areas of environmental sustainability and wildlife habitats concerns both Canadian and U.S. cattle producers. In western provinces and states, sage grouse habitat and potential listing as an endangered species is a threat to large acreage of grazing lands, more so in the U.S. CAFO regulations for both countries continue to see pressure. Cattle feeding in western Canadian provinces continues to grow with greater access to feed grains. The need to be proactive in these areas was recognized.

Generational Transfer and Estate Planning

Estate planning and transitioning management to future generations remains a topic of concern for Canadian and U.S. cattle operations. Though these situations vary greatly between regions and operations, the consensus recognizes the need for having this conversation and planning before it is too late. Older generations tend to retain the majority of operational management for many years, not allowing younger generations to take part until later in life. This may often result in fewer members of younger generations returning to production agriculture.

U.S. Country of Origin Labeling Regulations

Country of Origin Labeling regulations for meat products imposed by the U.S. continue to be a dominant concern for Canadian cattle producers. The Canadian Agriculture Ministry and Industry groups maintain opposition to mandatory labeling laws and believe the rules must be repealed. This also raises concerns for consumer perceptions as more customers express desires to learn more about where their food comes from. There are mixed opinions among U.S. cattle producers on COOL regulations and industry groups are working to have the laws changed.

Free trade and cooperation among Canadian and U.S. cattle and beef industries remains crucial for the success of both industries. Much opportunity exists for collaboration and partnerships for cattle producers that will lead to success on both sides of the border.

Montana Stockgrowers Association looks forward to future occasions to discuss the issues at hand and the exploration of opportunities for collaboration and partnerships with our Canadian counterparts.

Helena, Mont. – In a rare opportunity to participate in Montana’s rapidly expanding beef genetics export market, the Montana Department of Agriculture is seeking two representatives from the Montana beef genetics industry to join in a trade mission to Australia in May.

Australia is currently Montana’s second largest customer for beef semen purchases, yet Montana has never been on a trade mission to the country. “This is an exciting opportunity to grow in an important market and build on existing relationships,” said Marty Earnheart, Meats and Livestock Marketing Officer.

According to a report by USDA Foreign Agricultural Service, Australia herd size is expected to fall slightly to 27.6 million head due to persistent drought in some regions of the country, with beef exports accounting for almost 70% of their production. By comparison, the United States current inventory is 95 million head with 2.55 million head in Montana.

With the recent decrease in herd size in Australia, the department sees an opportunity to expand Montana beef genetics in the region as producers look to grow in their herds in the years ahead due to increasing international demand and additional trade opportunities.

“Although Australia’s herd size is only about a quarter of the United States, they are expanding their international beef trade. By showcasing Montana’s high-quality beef genetics, we see significate market potential,” explained Earnheart.

The trip dates have yet to be finalized, but it will coincide with 2015 Beef Australia from May 4 – May 9. The exposition is held just once every three years and will feature more than 4,500 cattle from over 30 breeds and facilitate new trade and export opportunities.

Montana beef genetic representatives interested in participating in the Australia trade mission should contact meat and livestock marketing officer Marty Earnheart via email: mearnheart@mt.gov or call (406) 444-2402 for an application. Applicants must have a valid passport and be willing to cover half of the travel expenses.

The Montana Department of Agriculture applied for and received funds through U.S. Livestock Genetics Export, Inc. (USLGE) from both the Market Access and Foreign Market Development programs. The awarded funds will pay for the department’s marketing officer’s travel and expenses, and at least half of each of the beef genetic representative’s travel expenses. USLGE is a not-for-profit, nationwide trade association that represents the international marketing interests of the dairy, beef, sheep, swine, and horse breeding industries.

The Montana Department of Agriculture’s mission is to protect producers and consumers, and to enhance and develop agriculture and allied industries. For more information on the Montana Department of Agriculture, visit agr.mt.gov.

Editor’s Note: Part two of a series of articles (Part 1) in which we will look at trade and the organizations that set the standards for these agreements. The next article will focus on the Codex Alimentarius. Provided by the National Cattlemen’s Beef Association for educational purposes. By: Mallory Gaines, NCBA Policy Analyst, Cattle Health

As discussed in the first article in this series, trade is a fundamental part of America’s cattle industry and the NCBA supports free and fair trade based on internationally-accepted, sound science. The framework supporting this principal is the World Trade Organization, which relies on guidelines developed by groups like the OIE.

In 1995, with the establishment of the WTO, the Agreement on the Application of Sanitary and Phytosanitary Measures entered into force. The purpose of the SPS Agreement was to ensure member countries that their consumers were being supplied with food that is safe to eat, but what is considered safe by international standards? The SPS agreement sets out the basic rules for food safety and animal and plant health standards, allowing countries to build upon this foundation to set their own standards. However, the agreement dictates that those standards and regulations must be based on science. This basis on science separates protection from protectionism. The World Organization for Animal Health, known by its French acronym OIE, is one body that sets those scientific standards.

Established in 1924, the OIE started with 28 countries. The U.S. joined in 1976, and in 1994, the OIE was designated by the WTO as the scientific reference body for animal health. Today the OIE has 178 member countries, with one country – one vote. The OIE collects and disseminates information on disease events, harmonizes health standards for trade in animals and animal products, and provides guidance for disease control and eradication. But today, the OIE is expanding with new mandates, and looking at developing guidelines on animal welfare, food production and safety, and helping member countries improve their veterinary services.

The OIE enforces strict reporting obligations for member countries for listed diseases. For routine diseases TB and blue tongue, annual and six-month reporting is required. For emergency or foreign animal disease the requirements are for immediate reporting, within 24 hours of confirmation. This applies to FMD, vesicular stomatitis, and BSE.

The OIE is made up of four specialist commissions. NCBA works most closely with the commission which develops the standards and recommendations for the safe trade of animals and animal products. Moreover, this commission oversees the work on animal welfare and food production and food safety.

As a member country, the U.S. participates at various levels, preparing the U.S. position based on science, sending official comments and working within our Region to build consensus. The OIE played a major role in our trade relationship with the first case of BSE in the U.S. in 2003. Their recognition of the U.S. as “controlled risk” for BSE helped our negotiators to rebuild foreign market share following market closures and protectionist attitudes. In May of 2013, with the work of USDA APHIS, the risk status was upgraded to “negligible risk” which further helped in gaining market share lost in the Pacific Rim, including Japan. And it is based on the standards out of the OIE that we continue to press for greater access to countries like China, Russia and Korea.

At the end of May, NCBA will attend the annual meeting of the OIE as part of the U.S. delegation. The OIE will adopt a chapter to the code of Terrestrial Animal Health and work on other policy issues. The official U.S. delegate to the OIE is Dr. John Clifford, USDA Chief Veterinary Officer, but the delegation often relies on the expertise of industry in crafting their recommendations and comments. It is important for all cattle producers that NCBA ensures the concerns of our members are addressed at the OIE and to ensure that standards considered and passed fit the needs of our industry. This will become all the more important as this body moves on to consider issues like animal welfare, on farm food safety practices and antimicrobial resistance.

Editor’s Note: Part one of a series of articles in which we will look at trade and the organizations that set the standards for these agreements. The next article will focus on the World Organization for Animal Health (OIE). Provided by National Cattlemen’s Beef Association for educational purposes.

Trade is a fundamental part of America’s cattle industry, and with new pacts on the horizon like the Trans-Pacific Partnership and the Transatlantic Trade Investment and Promotion agreement the beef industry is poised to take advantage of greater opportunities ahead. Ninety-six percent of the world’s population lives outside of United States’ borders, and it is critical to capitalize on these foreign markets to maximize profit margin. Beef demand looks different across the world, and foreign markets drive demand and increase profitability for beef cuts that are less popular here in the states, drivers our cattle industry can capitalize on. In 2013, trade brought home more value to the producer than ever in the past – $307 per head or $6.15 billion total. This premium underlines the value of trade for all segments of our industry. And the major regulator of these opportunities is the World Trade Organization.

The WTO has a long history in international trade. Its formation reaches back to the Treaty of Versailles and the end of World War I, with the establishment of the League of Nations. After World War II, the General Agreement on Tariffs and Trade was formed. And in 1995 with the Uruguay Round of trade negotiations, under the age is of the GATT, the WTO was formally created to discuss and negotiate the further development of trade rules and seek peaceable resolution to trade disputes. With its history in war, the main function of the WTO then as now, is to ensure that trade flows as smoothly, predictably and freely as possible.

To secure these market opportunities, countries work through the WTO. The WTO was built around trade agreements which were negotiated and signed by many of the world’s leading trade nations. These documents provide the legal ground rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social, environmental and safety objectives.

Economic development and well-being is dependent upon free trade and as such, the WTO’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side effects. That partly means removing obstacles and ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them confidence and security without fear of sudden policy changes.

Which brings us to the point of why WTO is important and what their role is in international trade. The NCBA does not necessarily work with WTO directly; we work with our government, the U.S. Trade Representative and the governments of other nations affected by decisions at the WTO. But the WTO makes many of their trade decisions based on standards set by other organizations. WTO gives these organizations credence by recognizing the standards they set. These organizations, like the World Organization for Animal Health, known by its French acronym OIE, and Codex Alimentarius, set the precedent that WTO looks at and that the cattle industry can use as a guide for animal health and food safety.

When our membership calls for free and open trade based on internationally recognized science, OIE and Codex provide the science that underlies that notion. And that is where NCBA works. Over the past several years and through the next months, we will be attending meetings and submitting comments and documents to ensure that the standards set on the global level for animal health and welfare and food safety are in line with the most recent science and that these standards work for the U.S. cattle industry.

An example would be a beef trade dispute with a country that refused to accept U.S. beef that was at any time fed a beta-agonist. Codex, has a set maximum residue level, or MRL, for certain beta-agonists in meat based on the scientific evidence presented by a varied committee of nations, experts and researchers. Since this level has been recognized internationally, it would be among the standards used if the U.S. were to take up a case against that country’s action at the WTO. And that is the type of action that preserves our ability to trade openly with other nations.

Of course not all WTO disputes are based on sound science. There are many other barriers to trade that the U.S. beef industry works with. There is protectionism both domestic and abroad. Policies like COOL, that discriminate against our trading partners and threaten retaliatory action against our beef exports to Canada and Mexico, which alone make up one-third of our total beef exports. And as with other trade disputes, the WTO is not the only way to work out our differences. As with our relations with China, Japan, the European Union and others; the decisions on how to move forward involve not only the possibility of enforcement at the WTO, but diplomacy and leadership through the Administration and our ambassadors and attachés. But we will continue to work with all of these groups to ensure we can provide the same great high-quality beef we raise and produce here in the U.S. to our customers across the world.

About

The Montana Stockgrowers Association (MSGA) is a non-profit membership organization that has worked on behalf of Montana’s cattle ranching families since 1884.